ONGC shares just 5% shy of scaling 52-week high; should you buy, hold or sell it post Q4 show?

ONGC shares in Wednesday’s early morning deals traded with gains even as global brokerages remained divided on the counter post the release of its Q4 earnings on Monday.

At the day’s high, the stock climbed to Rs 284.35, soaring nearly 2 per cent, and just 5 per cent shy of reaching the stock’s 52-week high price of Rs 292.95.

The state-run oil exploration company for the quarter ending March of the fiscal year 2023-24 announced a nearly 78 per cent increase in consolidated net profit at Rs 11,526.53 crore versus Rs 6,478.23 crore during the same period last year. The company’s FY24 consolidated net profit came in the highest-ever at Rs 57,101 crore. 

Revenue from operations at the company registered a marginal increase on-year from Rs 1.64 lakh crore to Rs 1.66 lakh crore in Q4FY24. 

The production of crude oil at the company during the reporting quarter logged a 2.4 per cent rise on-year, while gas production declined 3 per cent.

"ONGC has declared 11 discoveries (6 in onland, 5 in offshore) during FY 2023-24 in its operated acreages. Out of these, 6 are prospects (1 in onland, 5 in offshore) and 5 are new pool (onland) discoveries," read the company’s  statement.

How do global brokerages view ONGC post its Q4FY24 results?

Hong Kong-based global brokerage CLSA continues with its ‘buy’ rating with the target raised to Rs 330 as against Rs 300 earlier. The set target implies a potential upside of 18 per cent.

The brokerage is of the view that the company’s standalone 4Q PAT was 7 per cent ahead of estimates driven by higher crude sales despite a lower tax-adjusted realisation. The company’s management remained confident of driving production growth over the next three years & guided for a ramp-up in production from KG-98/2 in 2HFY25.

Meanwhile, Jefferies has also maintained a 'buy' view with a target of Rs 390. The set target implies a possible upside of 39 per cent. The brokerage said the company's standalone EBITDA is in-line with the estimates. The company's net profit for the period was 14 per cent ahead on lower exploration costs & higher other income. Production also had been broadly in-line. The management of the company guided for field ramp-up to peak over H2FY25. The global brokerage said that the company's valuation is at a steeper discount to Nifty in comparison to long-term average.

Conversely, while JP Morgan has accorded ONGC a 'neutral' recommendation, Goldman Sachs has given a 'sell' view and sees a potential downside of nearly 29 per cent.